Bulls lose steam: Sensex slips over 350 pts, Nifty below 24,500 ahead of July's retail inflation data

Sensex, Nifty retreat as global and domestic inflation data loom

Indian benchmark indices Sensex and Nifty reversed early gains to close in the red on August 12, putting the brakes on bullish momentum ahead of key inflation readings from both India and the US.

At close, the Sensex was down 368.49 points or 0.46 percent at 80,235.59, and the Nifty was down 97.65 points or 0.40 percent at 24,487.40. About 1,994 shares advanced, 1,889 shares declined, and 157 shares unchanged.

Broader markets painted a mixed picture—smallcaps outperformed midcaps—while the India VIX, a gauge of near-term market volatility, eased. Sector-wise, Nifty Auto and IT ended in the green, along with Bank Nifty and Nifty Realty.

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Caution came through as Sandeep Bagla, CEO of TRUST Mutual Fund warned of “overheating” risks in the current rally.

“We are expecting mid and smallcap earnings to outpace largecaps for the next couple of years, but markets can be brutal if earnings disappoint,” he said. Bagla noted that while the environment remains favorable for long-term outperformance in mid and smallcaps, short-term uncertainties make it prudent to stay selective.

Market sentiment was also tempered by anticipation of India’s July retail inflation print, with economists projecting CPI to fall to a historic low of 1.4 percent from 2.1 percent a month earlier—well below the RBI’s already-lowered FY26 forecast.

Across the globe, US inflation data is also in focus, with annual core inflation expected to edge up to 3 percent, the highest since February, as Trump’s tariffs add to price pressures.